Displaying items by tag: SNIC

Votorantim shone a glimmer of hope for the Brazilian cement industry with the release of its first quarter financial results this week. Increased sales volumes in Brazil, Turkey, India and Latin America led to an 11% rise in revenue to US$682m in the period. Admittedly back home in Brazil, most of this came from concrete and mortar sales, but after the slump Brazil’s had they’ll take whatever they can get. This compares to a 14% drop in sales revenue in the same period in 2017 due to falling cement consumption.

SNIC, Brazil's national cement industry association, preliminary figures for April 2018 show a similar trend. Cement sales for April 2018 rose by 8.9% year-on-year to 4.35Mt from 4Mt. Sales for the first four months of the year dipped slightly by 0.2% to 16.9Mt although this is an improvement on the first quarter figures showing the benefit a strong April has had. Improvements are driven by growth in the central and southern parts of the country. SNIC’s graph of accumulated sales (Graph 1) definitely shows a slowing trend of decreasing cement sales with April 2018 being the only the second month in over two years where sales have risen.

Paulo Camillo Penna, the president of SNIC, even went as far as to speculate that the three months from April to June 2018 might see the first sustained period of improvement since 2015 and that sales could even grow by 1% for the year as a whole. This is a far cry from Penna’s description of his industry at the start of 2017 as, “One of the worst moments in its history.”

Votorantim reported that some regions of Brazil were starting to show a positive trend in the second half of 2017. Unfortunately it wasn’t enough to stop the cement producer’s overall sales falling for the year. LafargeHolcim didn’t release specific figures for its Brazilian operations in 2017 but it did say that its cost savings programme had, ‘provided for material improvement versus prior year both in recurring earnings before interest, taxation, depreciation and amortisation (EBITDA) and cash flow.’ It reckoned that despite the market contracting, it had managed to increase its market share. Meanwhile, on the supplier side RHI Magnesita said in a first quarter trading update that its cement and lime business was flat due to continuing low capacity utilisation rates in China and Brazil.

If this truly is the end of the Brazilian cement market slump then it seems surprising that there haven’t been more mergers or acquisitions. Mineração Belocal, a subsidiary of Belgium’s Lhoist, said this week that it had purchased L-Imerys, a lime producer that operates a plant at Doresópolis in Minas Gerais. Local refractory producer Magnesita merged with RHI in mid-2017.

The big deal that hasn’t happened is the sale of InterCement, the country’s second largest cement producer. Owner Camargo Corrêa was reportedly selling minority stakes in the company in 2015. Then in early 2017 local press said that it was aiming for a price of US$6.5bn for the whole company with Mexico’s Cemex as a potential bidder. Since then nothing has happened publicly although the initial public offering of InterCement’s Argentine subsidiary Loma Negra in November 2017 for US$954m may have bought Camargo Corrêa the time it needed to wait for the market to improve. Rumours of a public listing of InterCement’s European and African operations have followed.

In its World Economic Outlook in April 2018 the IMF forecast a 2.8% rise in gross domestic product (GDP) in Brazil in 2018. If SNIC’s forecast for 2018 is correct then Camargo Corrêa may have survived the worst of the slump to live to trade another day. The price for InterCement at this point can only rise, as should the prospects of the Brazilian industry.

Brazil: According to data from Brazil's national cement industry union SNIC, domestic cement sales in January 2018 were down by 0.1% compared to January 2017, at 4.33Mt. However, average sales per working day increased by 0.2% in the same comparison. Apparent consumption in the period stood at 4.4Mt, down by 0.5% from January 2017. The results for the period were in line with SNIC's expectations, with sales forecast to drop in the first quarter 2018, before seeing growth in the second quarter 2018.

In the 12 months ending January 2018 domestic sales saw an accumulated 6.2% drop, in comparison with the previous 12 month period, at 53.77Mt. SNIC forecasts a 1-2% increase in cement sales in 2018.

Brazil: The Brazilian cement association SNIC expects an ‘effective’ recovery in cement sales to come in the second half of 2018. The association forecasts sales to grow by 1 – 2% overall in the year, according to the Valor Econômico newspaper. However, it expects a few months of weak demand before the market starts to change. Cement sales volumes fell by 6.4% year-on-year to 53.8Mt in 2016. The market previously peaked at 71Mt in 2014.

Brazil: Sales of cement have fallen by 7.6% year-on-year to 40.5Mt in the first nine months of 2017 from 43.8Mt in the same period of 2016. The data from the Brazilian cement association SNIC showed that cement sales had fallen in all regions of the country with particular decreases in the North and North-East areas. SNIC president Paulo Camillo Penna commented that the rate of decline was slowing compared to 2016 and that further progress was expected in 2018. He added that fruther government infrastructure investment was necessary to encourage this trend.

Brazil: Paulo Camillo Penna, the president of the Brazilian cement association SNIC, predicts that the local industry will start to recover in 2018. His comments follow the publication of data for August 2017, according to the Valor Econômico newspaper. He added that the country would need four or five years of growth to resume the levels of 2014, the last year sales increased reaching 71Mt. Sales of cement have been falling less steeply than previously but are still projected to end 2017 with a decrease of 7%. Sales are then forecast to grow by 1% in 2018 with a more rapid recovery expected to begin in 2019.

Brazil: According to data from SNIC, Brazil's national cement industry association, domestic cement sales came to 4.7Mt in July 2017, down by 10.5% compared to July 2016. Sales per working day were also down by 10.5% in the year-on-year comparison, but up by 3.3% compared to June 2017.

In the first seven months of 2017, domestic cement sales came to 30.7Mt, a fall of 9.1% from the same period of 2016, while in the 12 months ending July 2017 sales totalled 54.3Mt, down by 9.8% year-on-year. Apparent consumption in July 2017 stood at 4.7Mt, down by 10.1% from July 2016, with an accumulated 9.7% drop in apparent consumption in the 12 months to 31 July 2017. SNIC notes that the figures are in line with expectations for the period, though there may have been some impact from the political and economic instability in recent months. SNIC forecasts a 7% drop in domestic cement sales in 2017.

Brazil: SNIC, the Brazilian National Union of Cement Industry, reports that total cement sales have fallen by 9% year-on-year to 26Mt in the first half of 2017 from 28.6Mt in the first half of 2016. SNIC president Paulo Camillo Penna said that the figures were in line with the organisation’s forecasts and that they show a deceleration in the decline of cement consumption. Consumption is expected to pick up in the second half of the year and SNIC predicts that it will fall by 5 – 9% for the year as a whole.

“One of the worst moments in its history.” That’s how Paulo Camillo Penna, the newly appointed president of SNIC - the Brazilian National Union of Cement Industry - described his industry last week. Few people are likely to be envying his position at the moment. As Camillo Penna went on to explain, domestic sales of cement fell by 11.7% year-on-year to 57.2Mt in 2016. He added that following capacity utilisation rates of 70% in 2015 and 57% in 2016 that he expected the rate to fall below 50% in 2017. When he said it was bad he wasn’t kidding.

Graph 1 illustrates how stark the decline in cement sales has been since the growth period at the start of the 2010s. Sales have fallen by 15Mt since 2014 in a country that has a production capacity of 88Mt/yr. Graph 2 presents a regional picture of sales. Note in this graph the sharp drops in sales (21%) in the southeast region of Brazil, an area that contains the key cement producing states of Minas Gerais and Rio De Janeiro. The decline in the northeast region including the state of Bahia, another key cement producing state, has been less extreme but it is still over 15%.

Votorantim, the country’s largest cement producer by production capacity, reported that its cement sale volumes fell by 6% to 26Mt in the first nine months of 2016, with declines in Brazil offset by business in other countries like the US. Its sales revenue also fell, by 7% to US$3.03bn. InterCement’s cement and clinker sales volumes fell by 16% to 11.8Mt in the first half of 2016 and its sales fell by 31% to Euro898m. As it described it, ‘the political and economic instability in Brazil in the first half, impacting on unemployment, investment and government spending, ultimately retracted the construction activity, compressing cement consumption.’ To compound these problems newly opened production capacity also ‘intensified’ competition. Later in 2016 InterCement’s parent company Camargo Corrêa was reported to be in talks to sell a minority stake in Argentina’s Loma Negra to pay off its debts from the cement business in Brazil. Finally, from an international perspective, LafargeHolcim’s global results for the first nine months of 2016 were negatively impacted by ‘challenging’ conditions in Brazil amongst other countries. It laid out an environment of reduced sales volumes and falling prices, although it said that it had used cost cutting to fight this.

The question for Camillo Penna and the rest of the Brazilian cement industry is: where exactly is the bottom of the curve? SNIC forecast that cement sales will contract by a further 5 – 7% in 2017 and this is below the 11.7% drop experienced in 2016. So, does SNIC think that the industry is starting to hit against a bedrock of demand that economic headwinds can’t shift? In this kind of environment it seems likely to expect increased merger and acquisition activity. The merger of Brazil’s Magnesita and Austria’s RHI refractory companies that was announced in the autumn of 2016 may just be the start.

Brazil: The National Union of Cement Industry (SNIC) has said that 2017 may be the worst year on record for the local cement industry. Domestic sales of cement fell by 11.7% year-on-year to 57.2Mt in 2016. SNIC’s new president Paulo Camillo Penna described the situation as the worst in the industry’s history. He added that following capacity utilisation rates of 70% in 2015 and 57% in 2016 that he expects the rate to fall below 50% in 2017. SNIC forecasts that sales of cement will contract by 5 – 7% in 2017.

Brazil: The International Finance Corporation (IFC) has signed an agreement with the National Union of Cement Industry (SNIC) and the Brazilian Portland Cement Association (ABCP) to support the preparation of the Cement Technology Roadmap in Brazil. The project is being developed in partnership with the International Energy Agency (IEA) and the Cement Sustainability Initiative (CSI). It will be technically coordinated by Professor José Goldemberg, a former Minister of Education and former Secretary of Science and Technology.

In addition to co-financing the initiative, IFC will also use its experience to help produce two of the project's technical studies: energy efficiency and the use of alternative fuels. IFC’s present portfolio includes 30 investments and 10 advisory projects in the cement sector in 26 countries. IFC has already invested more than US$4bn in the sector globally and US$838m in Latin America.

The Brazilian edition of the Cement Technology Roadmap will map current and future technologies and their potential for energy efficiency improvement and greenhouse gas emissions reduction per tonne of cement produced up to 2050. Its main objective is to contribute to the development of the cement industry in Brazil towards a low CO2 economy, using technical solutions allied to a range of recommendations from the academic, government and financial sectors.

Four major themes are being analysed by the Cement Technology Roadmap - Brazil, which includes the direct participation of major academic and research institutions from various regions of Brazil. They are: Energy efficiency; the use of alternative fuels for co-processing; the use of additions to replace clinker; and the capture, storage and use of CO2.

Worldwide, two other studies on the cement industry have been previously carried out using the same methodology and with the same partners (IEA and the World Business Council for Sustainable Development) - the global Cement Technology Roadmap, in 2009, and the Low Carbon Technology Roadmap for the Indian Cement Industry, in 2013. The latter was also supported by IFC.

The Brazilian project was launched in September 2014 and is expected to be completed in the first half of 2017. The preparation of the Cement Technology Roadmap - Brazil is being supported by more than 90% of the country’s cement producers.